Hydrogen Market Report

What is Hydrogen?

Hydrogen is a clean fuel that can be used in transportation, electricity generation, and various industries. It can be produced from various sources, including natural gas, biomass, and renewable energy. Hydrogen is crucial for achieving net-zero emissions, potentially reducing carbon dioxide (CO2) emissions by 80 gigatons by 2050. According to the World Bank, the demand for hydrogen was approximately 87 million metric tons (MT) in 2020 and is projected to rise to between 500 and 680 million MT by 2050

As the world’s second-largest energy consumer, North America will rely heavily on hydrogen to ensure a low-carbon domestic energy supply, leveraging resources for renewable power generation, low-cost natural gas, and carbon storage sites. Currently, grey hydrogen dominates hydrogen production, generated through coal gasification. Blue hydrogen has a similar production method to grey hydrogen but includes carbon capture technology. The carbon capture rates are generally assumed to be 98% for blue hydrogen and 68% for grey hydrogen, with methane leakage ranging from about 0.2% to 1.5%. Green hydrogen, the cleanest form, is produced through electrolysis and generates zero carbon emissions when sourced from renewable electricity like solar or wind. It currently accounts for roughly 1% of global hydrogen production

Most hydrogen produced globally is still grey hydrogen, derived from methane or coal through natural gas reforming or coal gasification. Electrification and energy efficiency are key drivers of the energy transition, supported by renewables, hydrogen, and sustainable biomass. This fundamental change in how societies produce and consume energy could reduce nearly 37 gigatons of annual CO2 emissions by 2050

These reductions can be achieved through:

1. Significant increases in the generation and direct use of renewable-based electricity

2. Substantial improvements in energy efficiency

3. The electrification of end-use sectors (e.g., electric vehicles and heat pumps)

4. Clean hydrogen and its derivatives

5. Bioenergy paired with carbon capture and storage

6. Last-mile utilization of carbon capture and storage

Progress in these areas will depend on political will, targeted investments, a mix of technologies, and policy initiatives to implement and optimize their socioeconomic impacts. Europe is experiencing significant momentum toward decarbonization across various industries

Hydrogen offers a unique solution for reducing emissions across various sectors and complements other decarbonization pathways such as direct electrification, energy efficiency measures, and biomass-based fuels. This shift could lead to a seven- to eight-fold increase in demand while avoiding 7 gigatons of CO2 emissions annually

Electrolytic hydrogen production was mostly limited to demonstration projects. On the other hand, the 1.5°C scenario would require 4-5 terawatts (TW) of electrolytic hydrogen production by 2050, necessitating a growth rate faster than what has been achieved by solar photovoltaic (PV) and wind energy to date

Advancements in technology, improved efficiency, and reduced electrolysis costs could support commercially viable green hydrogen production, driving market growth. The manufacturing sector, especially iron and steel, will dominate the direct use of hydrogen as it replaces coal and gas in high-temperature processes. Hydrogen is crucial for decarbonizing sectors that cannot be easily electrified, such as aviation, maritime transport, and high-heat manufacturing. From now until 2050, hydrogen could help avoid 80 gigatons (GT) of cumulative CO2 emissions. With an annual abatement potential of 7 GT in 2050, hydrogen could contribute 20% of the total emissions reduction needed

Asia may not produce enough hydrogen to meet its increasing demand and might need to rely on imports from Oceania or the Middle East. In Japan, most hydrogen demand is expected to come from electricity generation, with ammonia and hydrogen being blended for this purpose